Since I have been visiting Bogleheads I find myself spending more and more time reading and learning about investing. My question is how much of the time you spend on investing and reading is actually benefiting your total return results and how much is "Hobby Time " as you just enjoy it? It appears to me that at some point as one gains a significant amount of knowledge the time spent is more Hobby Time than aiding in achieving higher returns. Your Thoughts?

This is an impossible question to answer. It does seem that what you spend your time learning may be more important than how much time you spend learning it. I imagine that spending a lot of time learning to understand company balance sheets would tend to make you believe you can pick stocks better than most people, and this may ultimately be counterproductive by encouraging you to trade individual stocks.

Excellent question. I, like many on here, have read and pondered A TON about investing, but in my view very little of it has helped with actual returns. Everything I have learned about investing can be shrunk down to a 5 minute sound bite:

1. Save as much as you can so you can invest as much as you can2. Asset allocation is king and should be based on your willingness, ability, and need to take risk3. Active management is a losers game and should be avoided4. Fees, taxes, and inflation eat into long term returns5. Stay the course from preventing yourself from messing everything up.

The rest of the time I do it for fun. Theory of finance and investing is interesting as it involves math and human behavior.

Good luck.

"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

My question is how much of the time you spend on investing and reading is actually benefiting your total return results and how much is "Hobby Time ?"

TT:

I believe most of us receive very little, if any, formal investment education. What we did learn was from Wall Street's self-serving marketing machine and the symbiotic media looking for something to write or talk about. Successful investing is counter-intuitive. Accordingly, I think nearly everyone needs to read a good book about mutual fund investing.

After we have learned the reasons why the Bogleheads Philosophy is so successful, and after we have structured our own long-term personal financial plan, I see little need to spend time on investing and reading.

"Stay-the-course" is what's important. Pat and I spend less an one hour a year maintaining our portfolio. On the other hand, I spend many hours nearly every day trying to help investors by answering questions here, and doing the research necessary when formulating my replies.

I started learning more about investing a couple of years ago, as we neared 50.

Reading and understanding led to a few revelations, such as: We really did qualify for a Roth IRA as our MAGI was under the limit (I was looking at our Schedule C income). The second year I delved into taxes and found ways to reorganize our taxable and retirement accounts to cut down a bit on taxes. I also opened a 401k to save more. I also have a better understanding of how to take out the money when we retire, considering taxes and safe withdrawal rates. All of these valuable insights came with much reading and research.

However, I notice recently that I get less and less new tips from reading as my knowledge has grown, and so I'm spending less time researching and more time just scanning for ideas that I hadn't considered yet. You will probably reach that point when the books no longer tell you anything you didn't already know from reading ten other books!

I've been formally reading and watching video about personal finance & investing for 10-12 years. Most of what I've learnedis not useful, since I index, but I've learned a lot about tax advantaged saving/investing (much of it from this board) and SS (mainly from sscritic: many thanks!)

Things I have learned recently:---- I learned that ROTH contributions can be withdrawn, so I funnel as much as I can from my EF to a ROTH to avoid taxes on an EF that I never expect to use.

I learned just recently that the contribution limits for a 401K/403b do not include the employer match at least at my income level, I had thought that it did. This will help when my kids get out of college and the house gets paid off at about the same time, freeing up quite a bit of money for retirement savings. I thought I'd need have a part of this as taxable then, but I should have enoughtax advantaged room.

I learned from this forum that I should consider average tax rates in retirement vs. marginal tax rates on contributions when making the ROTH/TIRA decision, all otherb things being equal.

I learned about the way SS benefits are calculated.

I learned about SS strategies like file and suspend to get spousal benefits and yet still defer till 70 for your own to get deferred tax credits.

Bogleheads is entertainment. I enjoy the good comments and either laugh or get angry at the stupid ones.

I do learn some things, but most of them are not applicable to me. I learn something about social security when I look up the rules for other people, but none of it is applicable to me, as I am already collecting and nothing is going to change. I learn about how to hide money from FAFSA, but my kids have already graduated from college. I also learn about the ethics and values of other posters, but I have my own standards for my life and reading bogleheads isn't going to change the values I got from my parents and my upbringing.

I especially like the posts where people make up their own tax law and state their fictional law as if it were fact. Again, I am torn between laughing and anger that they would post nonsense and mislead other people. I think looking facts up is better than making facts up, but others take the opposite view.

edit: I do learn a lot from those posters who actually know the law and answer questions accurately. Again, usually the situation doesn't apply to me, but a good answer is educational in the broad sense.

Last edited by sscritic on Fri Nov 30, 2012 12:00 pm, edited 1 time in total.

staythecourse wrote:Excellent question. I, like many on here, have read and pondered A TON about investing, but in my view very little of it has helped with actual returns. Everything I have learned about investing can be shrunk down to a 5 minute sound bite:

1. Save as much as you can so you can invest as much as you can2. Asset allocation is king and should be based on your willingness, ability, and need to take risk3. Active management is a losers game and should be avoided4. Fees, taxes, and inflation eat into long term returns5. Stay the course from preventing yourself from messing everything up.

The rest of the time I do it for fun. Theory of finance and investing is interesting as it involves math and human behavior.

Good luck.

This is an outstanding summary. Many of us enjoy very much coming to the forum. However, if for some reason we couldn't or didn't, the lessons learned likely last a lifetime.

I think it is important to distinguish between time required for investing and the time one spends learning about investing. As Taylor pointed out, one may only spend an hour per year directly managing their investments. Many of us spend a great deal of time reading and weighing the thoughts of others. In addition, I own several books that I will read about investing It many be considered a necessity by some, hobby by others, or even a passion by a few. The level of interest determines the time spent. Whether that interest is casual or intense, I think it is important to always appreciate the simplicity of Boglehead investing. There is little need to to make it complicated.

The amount of time I've put into this so far has really paid off-- I'm having my best year ever. But I suspect there's a law of diminishing returns going forward; I've already picked the low hanging fruit by lowering the ER drastically and arranging the asset allocation at a comfortable level. I will probably tweak the portfolio a bit over the next four years, as we are still accumulating, but I'm not expecting phenomenal results, just subtle enhancement (I hope).

OTOH, to study the markets is really to study human nature "under stress," and to study one's own psychology. That's valuable in itself, IMO.

"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore

staythecourse wrote:Excellent question. I, like many on here, have read and pondered A TON about investing, but in my view very little of it has helped with actual returns. Everything I have learned about investing can be shrunk down to a 5 minute sound bite:

1. Save as much as you can so you can invest as much as you can2. Asset allocation is king and should be based on your willingness, ability, and need to take risk3. Active management is a losers game and should be avoided4. Fees, taxes, and inflation eat into long term returns5. Stay the course from preventing yourself from messing everything up.

The rest of the time I do it for fun. Theory of finance and investing is interesting as it involves math and human behavior.

Good luck.

Pretty much sums it all up,excellent post.NUMBER 5 is So very critical to investment success,one needs to read and re- read that one when the market trends down and down and down like chinese water torture which it will do again at some time in the future.

"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Staythe course is right, after you have learned the basic investing principles it doesn't take that long And it is funAnd it is entertaining as sscritic saidand the markets are a study in "Human nature under stress"I sometimes call the Boglehead Forum "A Reality Show for Adults"

After I have figured out my financial strategy, the primary need for this site has greatly diminished. However, the secondary, tertiary, etc., value have held quite well over the years.

Mel has introduced me to the I Bonds. Larry has provided a timely guidance about TIPS selling at significant discounts in 2008. grok87 has alerted me to the last reasonable TIPS auction with his 2010-2011 thread "back up the truck, beep, beep." bobcat2 cites academic papers and interprets the latest academic thinking on the retirement planning.

Grabiner advised me about selecting a high-deductible health plan and HSA and on numerous other issues. Valuethinker provides outstanding comments on books, history, and current events. From JMacDonald I learned about the Teaching Company. LadyGeek and others interpret the latest technical gadgets. Nisiprius is pleasure to read no matter what the topic is. Kramer is a role model for the life in early retirement.

Even relatively mundane useful comments have patterns of appearance not unlike Poisson distribution. JupiterJones has recently provided some good insights about Vienna. Others have alerted me to the 4% CDs at the Navy Federal Credit Union and credit cards with chips offered by the State Department Federal Credit Union.

I could have had a balanced financial life without this knowledge. But why to abandon a gift that keeps on giving?

Victoria

WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

steadyeddy wrote:It's easier to stay the course when you have a community around you to affirm your minority view.

This is one thing I love about this website it turns herd mentality from a negative trait to a positive trait. Hanging out here when times get tough makes it MUCH EASIER for folks to hold their ground when everyone around you in the "real world" are clamoring you have to do something.

Good luck.

"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

steadyeddy wrote:It's easier to stay the course when you have a community around you to affirm your minority view.

This is one thing I love about this website it turns herd mentality from a negative trait to a positive trait. Hanging out here when times get tough makes it MUCH EASIER for folks to hold their ground when everyone around you in the "real world" are clamoring you have to do something.

TT wrote:Since I have been visiting Bogleheads I find myself spending more and more time reading and learning about investing. My question is how much of the time you spend on investing and reading is actually benefiting your total return results and how much is "Hobby Time " as you just enjoy it? ...

For those already invested wisely, it will always be necessary to continue learning and stay well informed so I wouldn't look at it as ever reaching the point of nonessential "hobby time." Bogleheads should be thankful they naturally like this stuff because many, if not most, people find it a grind. Re the exact benefit to total returns, that would be hard to know and probably not worth knowing. Staying well informed most often assures me I'm still on the right track and should stay the course and that's a big benefit right there. As for the BH forum, it's the best place I know of to get financial information from a variety of professional and non-professional (but mighty smart) sources. A goldmine.

I spend quite a bit time reading, following the markets and logged on to this forum. This forum reinforces my investment plan and keeps me focused. I only occasionally rebalance my AA when bands are hit. Otherwise I'm happy doing nothing.

once you get your investment philosophy most of the rest of the time is a hobby -- but there is an occasional gem that may make you refocus on your portfolio. e.g. I think Bill Bernstein's recent rule of thumb that a retiree should have 20 to 25 times their residual expenses in very safe investments made me think twice about just having a percentage allocation to equities and fixed income. Of course the danger is that there are many plausable investment ideas and theories and you don't want to bounce around responding to them.

By the way it took several years of reading and thinking and re reading to get a comfortable investment philosophy. It was the reinforcement of several good sources that finally made it sink in.

I think a lot of the benefit of Bogleheads to many people may be in ways that are hard to quantify in terms of returns.

Specifically, it provides a knowledge base which makes one less susceptible to bad investment approaches. If one dismisses out of hand a too-good-to-be true market linked CD or other such structured product, then they sidestepped a major financial pothole. It's hard to say that your annualized return was X% higher because of what you didn't do, but clearly you are better off.

I spend a few hours per year on investing. This mostly involves looking at investments from a short to mid range tax perspective and checking my AA when I near trigger points. Time spent here is often educational, but just as often entertainment. I enjoy providing help when questions are asked and I think I have a reasonable perspective to share.

Pretty close to full time, or at least 3-4 hours a day for the past few months and at least 2-3 hours a day for the past year. Like any business or career training, I want to be fully aware and educated before I dive in.I've bought stocks and funds along life's way, without very much knowledge, except to diversify among the 10 sectors of the S&P 500.Mostly individual equities and muni bond funds, with a smattering of a little bit of everything else.Global? What's that? It wasn't until 14 months ago that I sat down with my "advisor", who recommended I diversify with a huge movement (33%) out of my holdings into 5 new funds.That's when I started my serious homework, which eventually led me to this site. Thank god. Not only would my portfolio be down 15% from where I am now, if I would've blindly taken said "advisor's" recommendations, but I would have paid over $4000 in fees and be in funds with ER's averaging 2% (not including turnover). A little knowledge prompts the quest for more, I guess, so I'm fully engulfed in getting my rebalancing act fine tuned and am very active in making adjustments.After going back 30 years and looking at the recommendations I bought, I realized how much better I could've done if I only knew what I know now. I'm still reading and learning with enthusiasm, but at some point I think I'll reach the line of diminishing returns and chill out a little and just read this forum for the new tidbit here and there as well as the entertainment.A big thank you to JB for creating all of you and thank you for creating this site!

"The stock market is a giant distraction from the business of investing." - Jack Bogle

My question is how much of the time you spend on investing and reading is actually benefiting your total return results...

What I have learned over time is that your total return results are not important. What is important is setting serious achievable goals and developing and implementing strategies to actually meet these financial goals. I believe if everyone at Bogleheads were to learn and internalize this basic principle of personal financial economics, then they would all be better off financially.

If, on the other hand, you still believe your total return results are important, you need to keep reading. You need to keep reading a lot

BobK

In finance risk is defined as uncertainty that is consequential (nontrivial). | The two main methods of dealing with financial risk are the matching of assets to goals & diversifying.

Agreed with others. Now that I have learned why the Bogleheads approach to investing is the superior one, I don't need to keep reading about investing. But I read this forum anyway, for fun, and I still do learn some things now and then.